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Tap onshore gas and give farming landowners some share of profits

Tuesday, 18 July 2017

Tap onshore gas and give farming landowners some share of profits
Illustration: Sturt Krygsman

Nick Cater writes in The Australian:

Daniel Andrews is scarcely credible in any role, not least as Victorian Premier in the lame production that’s been running on Spring Street for the past 31 months.

The farce took an unlikely twist in March when Andrews ­assumed the guise of the farmers’ friend. “The Labor government will always back our farmers and do what’s right to protect our world-class food and fibre heartland,” he said, with the implausible charm of a fox stroking feathers in a henhouse.

What Andrews was actually delivering was a guarantee that electricity prices would rise even faster, households would suffer and more businesses would be pushed to the wall. Those are the inevitable consequences of the blanket ban on gas exploration introduced with the inexplicable connivance of the Victorian opposition and the Victorian Farmers Federation.

The plot took a bleak turn after Andrews' announcement. Two days later the Energy Market ­Operator warned of serious gas shortages on the east coast. Within weeks the Hazelwood power plant shut up shop, removing 15 per cent of Victoria’s reliable generating capacity from the grid. Higher electricity prices will ­inevitably follow; the Australian Energy Market Commission warned that Hazlewood’s closure would add up to $200 to the average power bill.

Gas is Victoria’s salvation, or rather it would be if any could be found at a reasonable price. The wave of irrationality that consumed the Victorian parliament as it considered the Resources Legislation Amendment Bill 2016 ensures that gas prices will rise still further.

Forget the argy-bargy over Finkel. The energy mix is an academic debate until state governments remove the impediments to onshore gas. Every ­attempt to make up the shortfall will be frustrated until the gov­ernments of Victoria, NSW, South Australia and the Northern Territory put national interest ahead of the insatiable demands of mad green activists.

Each administration has flicked the switch to bonkers in its own peculiar way. Perhaps the most ridiculous move was in ­hydro­carbon-blessed Victoria. It was as if the Swiss announced a moratorium on chocolate or the Somerset village Cheddar ­declared war on cheese. Trillions of cubic feet of underground gas, bequeathed to southern Victoria by tectonic shifts in the late Cretaceous period, have been ruled off limits.

There is three times as much recoverable shale and tight gas buried in the Gippsland and Otway basins than in the Bass Strait, according to Geoscience Australia. None of it requires fracking. Offshore gas typically costs at least $10 a gigajoule at the wellhead. The onshore gas in southern Victoria could be ­extracted for as little as 40c. It is relatively free of contaminants such as water and carbon dioxide, making it easy to process and clean to burn.

Yet, in another manifestation of energy madness, it is now illegal not just to extract gas in Victoria but merely to look for it. The origins of gasphobia and its supporting myths can be traced to Queensland, where the Beattie and Bligh government opened the door to coal-seam gas exploration a decade ago.

It was the start of a brief era of cowboy capitalism that sullied the reputation of the resource industry and fuelled community distrust. Farmers were treated as third parties in a transaction ­between resource companies and a royalty-seeking government. Little thought was given to resolving the natural tension between resources and agriculture.

The legitimate concerns of the little people, arrogantly dismissed by the government in Brisbane, were taken up by Alan Jones and broadcast to the nation. They fed a broader narrative that governments were not listening, and played a not inconsiderable part in the fall of the Bligh and Newman governments.

Far more insidious, however, was the rise of Lock the Gate, a deep-green movement schooled in Trotskyite entryism. It pandered to local community concerns, fed a vacuum of infor­mation with fiction and gave local movements organising ­capacity, skills and funds. Its reach spread beyond the Queensland border, first to the Liverpool Plains in northern NSW and then to the rest of the country, convincing nervous state governments that they faced a backlash if they went down the Queensland path.

A frank assessment of the cowboy-era mistakes by the Queensland government and industry was published last week by the Gasfields Commission, a body set up by the Newman government to help bring order to a process that was getting out of hand.

Farmers and communities had felt bullied, dominated and ­ignored; they did not understand the legal framework; they had trouble finding credible information; and they felt powerless in their relationship with an “uninvited guest” who had set up shop on their land.

The stress took a toll on the wellbeing of individuals and families, and allowed an incomplete understanding of technological risks to harden into deep anxiety.

“I am not proposing to stand here and defend the indefensible,” Queensland Resources Council chief executive Michael Roche later admitted. “Some of the companies we represent and many more we don’t have made mistakes, and in the worst examples have taken far too long to remedy them.”

The commission’s report should be studied carefully by the Victorian opposition. Its recommendations offer a blueprint for developing onshore gas with community support. It might also adopt a separate proposal to give 10 per cent of royalties to the farmers. They may have no constitutional right to underground resources but many would consider it the right thing to do.

It would also introduce a price signal; offered a choice between a guaranteed royalty stream or ­intermittent returns from their paddocks, few farmers would hesitate. One only wishes that the Victorian Farmers Federation would argue this position more loudly, since a ban on gas exploration and its consequences punishes its members as surely as it punishes all Australians.

Lock the gate? Try sitting on the fence.

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